2010 (2) TMI 1172 - AT - Income Tax

Summary

Issues involved: Addition of Rs. 7,75,000 on account of alleged unexplained cash credit.

Summary:

Issue 1: Alleged unexplained cash credit
During assessment proceedings, the assessee was asked to produce individuals from whom loans were taken to prove the genuineness of the credits. The Assessing Officer (A.O.) found discrepancies in the sources of the credits and treated Rs. 7,75,000 as unexplained cash credit, adding it to the assessee's income. The matter was taken to the CIT (A) who upheld the decision.

Issue 2: Arguments and Decision
The assessee argued that statements of the individuals were recorded, and they confirmed the sources of the credits. The A.O. had doubts about the sources of deposits, but the individuals maintained that the amounts were from their savings or earnings. The A.R. relied on a decision of the Gujarat High Court to support the case.

Issue 3: Tribunal's Decision
After hearing both parties, the Tribunal found that the assessee had produced the individuals, whose statements confirmed the loans given. The Tribunal noted that the assessee had fulfilled the initial burden of proving the credits, including the identity, capacity, and genuineness of the transactions. Citing the Gujarat High Court decision, the Tribunal allowed the appeal of the assessee.

Conclusion:
The Tribunal ruled in favor of the assessee, holding that the initial burden of proof regarding the cash credits had been met, and the genuineness of the transactions was established, leading to the allowance of the appeal.